Ex-L-3 Worker Convicted of Exporting Arms Data to China

A former employee of L-3
Communications Holdings Inc. (LLL) was found guilty of stealing files
related to military technology from the defense contractor and
illegally sending them to China.

A federal court jury in Newark, New Jersey, yesterday
convicted Sixing Liu, also known as Steve Liu, of six counts of
violating the Arms Export Control Act, as well as possessing
stolen trade secrets, transporting stolen property and lying to
federal agents, according to court records.

Liu, a Chinese citizen who had lived in Flanders, New
Jersey, was convicted of stealing thousand of electronic files
detailing performance and design of guidance systems for
missiles, rockets, target locators and unmanned aerial vehicles
in 2010. Prosecutors alleged that he delivered presentations
about the technology at several Chinese universities, the
Chinese Academy of Sciences and at government conferences with
the aim of securing future employment.

He faces as long as 20 years in prison and a $1 million
fine for violating export restrictions applying to arms,
according to the government. The U.S. maintains an arms embargo
with China, the government said in a statement.

“We will not tolerate the exploitation of this country’s
opportunities through the theft of our secrets,” U.S. Attorney
Paul J. Fishman in New Jersey said in a statement.

A lawyer for Liu, James Tunick, said his client plans to
appeal the conviction.

‘State of Mind’

“It was our contention that he didn’t do anything with a
state of mind to be criminal,” Tunick said in a phone
interview. “The jury rejected that contention.”

Sentencing was scheduled for Jan. 7. Liu was taken into
custody following the verdict on fear that he would flee, the
government said.

Jennifer Barton, a spokeswoman for New York-based L-3
Communications, said the company is pleased the jury reached a
verdict.

“L-3 has fully cooperated with authorities throughout the
investigation and we continue to have comprehensive policies and
protocols in place to ensure the highest level of security is
observed by all employees,” she said in an e-mailed statement.

Also yesterday, charges were unsealed in federal court in
Brooklyn, New York, against another Chinese national, Ming Suan
Zhang, on charges of violating U.S. trade restrictions.

Carbon Fiber

Zhang, who is accused of attempting to illegally export
thousands of pounds of aerospace-grade carbon fiber to his home
country, appeared yesterday before U.S. Magistrate Judge Vera
Scanlon. The government alleged that he was involved in a
proposed multimillion-dollar deal to export material for
possible use in a test flight of a new Chinese fighter jet.

The Commerce Department restricts the export of goods that
could contribute to the “military potential or nuclear
proliferation of other nations or that could be detrimental to
the foreign policy or national security of the U.S.,” according
to a criminal complaint. It’s a crime to willfully export those
materials without an appropriate license, the government said.

Zhang, who is in U.S. custody, didn’t request bail.
Prosecutors declined to comment on where or when Zhang was
arrested. If convicted, Zhang faces as long as 20 years in
prison, according to the government.

A court-appointed lawyer for Zhang, Daniel Nobel, told
reporters after the hearing that his client is “an honest
businessman who was caught up in something he didn’t fully
understand but he believed to be legal.”

Zhang is from Quanzhou, China, and was in the business of
manufacturing sports equipment, Nobel said.

‘Somewhat Sensitive’

Nobel declined to discuss the circumstances of Zhang’s
arrest, saying the “government regards it to be a somewhat
sensitive matter.”

Zhang came to the attention of U.S. authorities through an
investigation into two individuals in Taiwan who were attempting
to locate large quantities of the specialized carbon fiber,
according to the government.

In a recorded phone call in July, one of the Taiwanese
individuals discussed the order with Zhang, the government
alleged. Zhang said during that call, according to the
complaint, “When I place the order, I place one to two tons.”

Zhang later agreed to meet with an undercover Homeland
Security agent posing as a carbon fiber seller, according to the
complaint. Zhang said he needed a sample because it would be
used in the test flight of a “fighter plane,” the government
said in the complaint.

Travel Plans

In an e-mail to the agent, Zhang said he planned to travel
to the U.S. on Sept. 10 and provided the name of his hotel,
according to the complaint.

One ton of the carbon fiber Zhang was seeking, manufactured
by Tokyo-based Toray Industries Inc. (3402), typically costs about $2
million, according to the filing.

“The defendant allegedly tried to break laws that protect
our national security by preventing specialized technologies
from falling into the wrong hands,” U.S. Attorney Loretta Lynch
in Brooklyn said in a statement. “We will use every tool at our
disposal to protect the homeland and give teeth to the laws that
maintain our technological superiority on the battlefield and in
the skies.”

The New Jersey case is U.S. v. Liu, 2:11-cr-00208, U.S.
District Court, District of New Jersey (Newark).

The New York case is U.S. v. Zhang, 12-mj-00829, U.S.
District Court, Eastern District of New York (Brooklyn).